ITeMGroup works with a major manufacturer to improve Sales Forecasting.

Background
Our client is a large manufacturing business with operations in every State. Recently, the company centralised its manufacturing structure, bringing together manufacturing sites that previously operated under more than a dozen separate managements and brand identities.

ITeMGroup was asked to introduce a business information system based on a set of specific Key Performance Indices (KPI’s), agreed with the company’s sales management personnel.

These included:
• Sales Revenue
• Debtor Management
• Forecasting
• Customer Relationship Management.

Now, for the first time in the company’s history, it was possible for sales representatives and sales management to see up to date, national information regarding their customers’ sales activities and forward orders. After the first modules (cubes) were in place, allowing measurement of sales revenue and debtor management, a platform for managing the sales forecasting KPI needed to be developed.

The Challenge
Activity measurement at sales representative level was still a relatively new concept for the sales team, who were also being asked to provide more information on their daily activity and on their customers. As a result there was reluctance to add another program to those current in use by the sales teams.

How ITeMGroup met the challenge!
Through the implementation of the first modules, actual sales data was already being delivered on-line each day, and forward orders also existed within the sales cube. Therefore, some of the information related to customer forecasts already existed from information provided by the sales team.

What was missing, however was information regarding expected sales orders, which had not yet been booked with the company. Using a central quoting application, each sales representative was provided information on forward bookings by customer, by month. The data was restricted to those customers served by the representative, who could then focus on business known but not yet booked.

Customer history was also provided on-screen, as well as summary and budget data to allow each sales representative to gauge their overall sales performance as well as the customers’ sales with budget. Sales Reps were asked to provide their estimates of sales revenue by customer for the coming six months. The forecast report was required by the 20th of each month and data was entered into the web based application.

A significant number of potential future sales was being captured through the new reporting procedure.
Data entered by sales representatives was then up-loaded into the sales cube where, for the first time, sales management could compare sales forecasts with budget and history. Discussion of the data was encouraged between management and the sales team to fine-tune the forecasts, resulting in better forecasts being available for month-end reports.

How the Sales Forecasting Module delivers business success.
Historically, sales forecasting recording was poorly practiced by the business. Information was not generally available to all sales managers and was therefore not transparent. As a result, the accuracy of forecasting was low. Accuracy in sales forecasts has risen from approximately 50% to 70%.

By increasing the accuracy of sales forecasting, the company is better able to plan future manufacturing activity. With the introduction of a disciplined sales forecasting procedure, the sales management team is fully informed on forward sales activity as well as historic activity.

An added benefit has been a greater awareness by sales representatives of their individual performance compared to budget.